Supposedly, Sony is about to open a new department that will explore a "cell phone-game gear hybrid." Work on the fabled project could begin as early as this month. So far, Sony has declined to comment on the rumors.
If the rumors about a PSP phone were true, it would be fairly obvious to say that Sony is targeting Apple's iPhone. Gaming has taken center stage in the iPhone-iTunes App Store since the introduction of the iPhone 3G. Seven of Apple's top ten iPhone applications are games, and mainstream game publishers have for some time been incorporating the iPhone into their plans.